TOKYO, Oct 12 (Reuters) - Japan's Nikkei edged higher on Friday, moving off its lowest close in more than two months, as the yen slipped against the dollar after wireless service provider Softbank Corp

said it was in talks to invest in U.S. firm Sprint Nextel .

A source has said Softbank is eyeing a controlling stake in Sprint worth more than 1 trillion yen ($12.8 billion) and the talks have also spurred speculation that the Japanese firm could also make a run at other companies via Sprint, potentially costing 2 trillion yen.

Softbank

slid 15 percent as investors were concerned its overseas expansion would be too costly and have no synergy with its Japanese business.

"It's a huge deal. Often when the market turns, it often comes from big M&A."

Gains for the Nikkei were also capped by a near 10 percent slump in Fast Retailing

after its results disappointed.

The Nikkei

climbed 0.3 percent to 8,572.70, on track to snap a four-session losing streak but was still down 3.3 percent for the week, which would be a fourth straight week of losses.

Amid concerns that the upcoming quarterly earnings season will be quite weak due to sluggish global growth, the benchmark has fallen 7.7 percent since hitting a four-month high on Sept. 19 though it is up 1.4 percent this year.

Softbank's stock slid to a more than four-month low and was on track to post its biggest one-day percentage drop since 2003. The stock was the most-traded on the main board by turnover.

Softbank's rival, KDDI Corp advanced 3.3 percent and was the fourth-most traded stock on the main board.

The softer yen, which was quoted at 78.49 yen to the dollar, down from Thursday's high of 77.94, helped exporters.

Toyota Motor Corp , Canon Inc and TDK Corp

were up between 1.9 and 2.5 percent.

Fast Retailing was the second-most traded issue after its full-year operating profit ended August came in below market expectations, while investors were also disappointed with its earnings guidance for this business year.

The broader Topix

advanced 1 percent to 720.85.

Data from Japan's Ministry of Finance showed foreign investors turned net buyers of Japanese stocks last week after two weeks of net selling.